Fertilizer shortage emerges as a new risk to global food supply

Rising natural gas prices driven by the war in Iran and disruptions to energy flows through the Strait of Hormuz are forcing an increasing number of fertilizer plants to cut production or shut down entirely. Natural gas is the key feedstock for nitrogen fertilizers such as ammonia and urea, and the surge in energy costs is making production economically unviable in many markets.

As a result, the energy shock is beginning to directly affect agricultural supply chains. Reduced fertilizer output could limit farmers’ access to key inputs ahead of major planting seasons, posing risks for the production of staple crops such as rice, wheat, and corn.

The pressure is particularly strong in countries that rely on imports of both energy and fertilizers. Nations in South and Southeast Asia, Sub-Saharan Africa, and parts of Latin America are facing a double shock — higher fuel costs for agriculture combined with tightening fertilizer availability.

A similar situation occurred during the 2022 energy crisis, when surging gas prices caused ammonia production in Europe to drop by about 70% within a few months. If the conflict in the Middle East continues and is not resolved before the Northern Hemisphere spring planting season, the impact could extend well beyond 2026, potentially pushing global food prices higher.

Tags: fertilizers